USDA Loans: Zero Down Payment in More Areas Than You Think

USDA (U.S. Department of Agriculture) guaranteed loans are often overlooked. They offer zero down payment in eligible areas, which include some small towns and outer suburbs, in California as well as elsewhere.

The home must be in a USDA-eligible area; check any address on the USDA eligibility map. Household income generally must be at or below 115% of the area median, and USDA counts every adult in the household. The home must be your primary residence. You must be a U.S. citizen, non-citizen national, or qualified alien such as a permanent resident; USDA ended a temporary path for some other non-citizens in March 2025. USDA sets no single minimum credit score, but lenders set their own, and files without an automated approval need manual underwriting.

No down payment required. Instead of mortgage insurance, USDA charges a guarantee fee: for loans obligated in fiscal year 2026, 1% upfront and 0.35% a year, usually less than FHA (Federal Housing Administration) mortgage insurance, though USDA can change it each year. Rates are set by each lender, so compare offers. Closing costs can be financed into the loan if the appraisal supports it.

USDA's definition of "rural" includes some suburbs, small towns, and areas near larger cities. Eligibility depends on population and other factors USDA reviews, so the map, not a rule of thumb, is the answer. Check it before assuming you do not qualify.

• ✓USDA loans require zero down payment and have relatively low guarantee fees
• ✓Check the USDA eligibility map — some suburbs and small towns qualify
• ✓Household income generally must be at or below 115% of area median income, counting every adult in the household
• ✓USDA's fees are usually lower than FHA mortgage insurance